Using The Blockchain To Clean Up The Niger Delta

In southeastern Nigeria, in an area known as Ogoniland off the coast of the Gulf of Guinea, is the site of one of the most polluted regions in the world. Over half a century of oil drilling and spills in the Niger Delta by Shell and other companies have left the area’s creeks, swamps, fishing grounds and mangroves awash in black, oily crude. A 2011 United Nations report said some areas remain contaminated 40 years after a spill, despite clean-up efforts.

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The environmental devastation is widespread within the 1,000 square kilometers of Ogoniland — equivalent to roughly 390 square miles or about a third of the size of Rhode Island. It has destroyed the livelihoods of farmers and fishermen in surrounding villages, while jobless youth facing a bleak future are taking up arms, destroying pipelines and wreaking other havoc. Damaged pipelines have led to more oil spills, while corruption and locals’ deep distrust of outsiders have further hampered assistance.

Cleaning up the Niger Delta and improving the economic plight of the area’s villagers have long been a passion of Chinyere Nnadi, founder and CEO of Sustainability International, a U.S. nonprofit whose goal is alleviating poverty in Africa. His family came from Nigeria and he remembers vacations back to their village where they had to deal with lack of electricity, unpaved roads, armed robbers and devastated agricultural crops. Since other groups have already tried to clean up the oil mess with mixed results, Nnadi realized that any solution must start with fighting corruption and building trust before any real progress is possible.

“I’m personally invested in it because it’s my family history,” Nnadi says in an interview with Knowledge@Wharton. “From the outside, it looks like it’s something as simple as solving an environmental problem. But then when you look into the society, you realize [the root of the problem is] systemic corruption and the lack of transparency within the actual community.… Because that system is sick, and the actors don’t trust each other, no work is able to be done.” To solve the problem, Nnadi said he realized that “we would have to introduce a new way of doing things.”

“What we’re looking to do is activate the local person, arm them with a new skill or a new tool to support their community.” –Chinyere Nnadi

Fighting Corruption

Nnadi’s new way is the blockchain, a decentralized virtual ledger where records are verified, cannot be changed and are publicly accessible — if everyone’s eyes are on it, no one can get away with anything. To that end, his nonprofit is collaborating with the Blockchain for Social Impact Coalition, an initiative launched last month by ConsenSys, a blockchain technology software firm. “The reason that the blockchain is really important is because people don’t need to trust each other, they need to trust the tool,” says Ben Siegel, ConsenSys impact policy manager.

According to a May 2017 report by the European Union, there are hundreds of blockchain-based solutions that track a myriad of transactions: casting votes in an election, knowing whether a raw material was ethically sourced, and even ascertaining that a bottle of champagne really came from France’s Champagne region. But the EU report also noted some drawbacks. For example, while public records are fine to put on the blockchain, sensitive financial records could be an issue. It’s difficult right now to match people to records, but future decryption technologies could make this easier. “Some sensitive information simply should not be stored in distributed ledgers,” the EU report said.

For Nnadi, however, the goal is to solve accountability and corruption issues in Nigeria. “Our thesis is that because the centralized institutional nodes of accountability have been compromised, distributed accountability could be the way to serve the interest of all of the community stakeholders: citizens, government and businesses. Through this mechanism, we hope to engineer economic inclusion and community engagement.”

Smart Contracts

Sustainability International and the blockchain coalition are looking to use “smart contracts” to bypass corruption and solve the problem of distrust in Ogoniland. These digital contracts automatically execute when all parties fulfill their responsibilities. For example, if Shell has set aside $10 million to clean up an oil spill, funds would be released to the contractor after the work has been verified as finished. “The total monies for the contract won’t be fulfilled until the community members have confirmed that this project has been completed,” Nnadi says. Ordinarily, he notes, the contractor helps himself to some of the money.

“You’re engineering accountability,” Nnadi continues. “Suddenly, you’re introducing new skillsets to the community where they’re able to monitor projects at international sustainability standards.” The community also benefits from all of the capital being put to use. Shell wins as well since it could monitor from afar and “know what’s happening deep in the jungle in the Delta.” His nonprofit is working on delivering access to the blockchain via mobile phones. (Eight in 10 Nigerians have them, according to BI Intelligence.)

Kevin Werbach, a Wharton professor of legal studies and business ethics who has studied the blockchain, says there’s been an “explosion of blockchain-based applications and systems. It’s still very early. It’s still not as solid and reliable as where they need to be, but it is clearly where we’re going to see more activity.” He notes that the blockchain has been used in various social impact efforts. In May, the United Nation’s World Food Programme conducted a pilot that gave cryptocurrency vouchers to 10,000 Syrian refugees in Jordan that they redeemed at certain markets.

“It certainly has potential for social impact applications as well as commercial applications,” Werbach says. “The danger is people think it’s a magic bullet. If the problem is getting accurate information into the blockchain in the first place, the blockchain can’t solve that problem. If there’s a massive power imbalance, the blockchain can’t automatically solve that. Certainly, it has a lot of potential in the social impact context. But we have to be careful about what the technology can and cannot do.”

Laying the Groundwork

Nnadi is aware of the inherent challenges of fighting deep-rooted dysfunction in Nigeria. His nonprofit has been working in the region for the last four years to identify people and groups they can trust, specifically community-based nonprofits. These organizations have become popular as a response to systemic corruption. “It’s [assisting] the community activists that already exist on the ground and have been fighting with no help,” he says. “What we’re looking to do is activate the local person, arm them with a new skill or a new tool to support their community.”

Nnadi aims to “open up a communication channel with the villager on their feature phone directly to Shell or to the government.” Currently, there is no direct, quick link, and so reporting and clean-up of spills are delayed. He is working with Media for Justice in Nigeria, for example, to station environmental monitors in every village in the Delta who use their smartphones to take photos of spills and share them with an instant messaging group. But the information is siloed within the group, and it could take months before reaching someone in government or at Shell.

“We’re on the cusp of proving that blockchain has the potential to really change the way we think about social impact.” –Ben Siegel

“We’re looking to use feature phones and create a communication channel [between] the villager and our platform so that there’s an ability for the villager to be a 24/7 monitor” — not only for spills, but also for acts of terrorism such as bombing of pipelines and illegal refineries, Nnadi says. Such activities cost oil companies and the government a fortune and thus they could be motivated to help groups like community nonprofits. The basic thesis of the pilots is to “empower the 99 actors against the one bad actor.”

Sustainability International is planning to launch several pilots in the Niger Delta over the next year, starting with small, controlled tests. Its initial endeavor is actually to glean information about the clean-up process by doing the work manually at first and then adding layers of technology as appropriate. The nonprofit plans to work with people in the village instead of bringing in workers from outside the area; the blockchain will be piloted afterwards. “The core problems of our use case that we are looking to solve are provenance, payments, security and identity,” Nnadi says.

Siegel adds: “A platform like Sustainability International’s project has the potential to create a blockchain solution that can be used not only in Nigeria but … [also] anywhere we’re trying to fight corruption.” He says the blockchain coalition is creating a decentralized community of meetup groups worldwide interested in using the technology for social impact. It is holding a month-long hackathon starting on September 7 to aid that effort. “We’re on the cusp of proving that blockchain has the potential to really change the way we think about social impact,” Siegel says.